Similar but not the same

Cyclists will know of Assos. Fashionistas will know of ASOS. So what happens when the two brands go head-to-head?

The decision has now come out from the Court of Appeal in respect of the appeals and cross-appeals from the High Court judgment of Mrs Justice Rose. The claimants are the owners of the Assos cycling clothes company. They sell clothing in 37 countries worldwide, including 15 member states of the EU. The sales take place primarily through specialist cycling stores. In order to maintain a high-quality brand image, Assos has not encouraged sales on the internet and does not have an online store. Assos owns a community trade mark (CTM) registration for this mark in classes 3, 12, and 25. The specification of goods in the later class reads ‘clothing, footwear, and headgear’.

ASOS was founded in 1999, originally under the name ‘As Seen On Screen’. It has become a global fashion and beauty retail business conducted purely as an online retail business. The acronym ‘ASOS’ was adopted in 2002. From 2004, it started to sell its own ASOS-branded range of clothing with a turnover of nearly £500m. 

Community proceedings

ASOS owns a UK trade mark registration. It also applied for a CTM registration in 2006.
Assos opposed the application at the Office for Harmonization in the Internal Market (OHIM)
and was successful. The Board of Appeal at OHIM determined that the goods covered by the two community marks were identical or similar and that there was a high degree of visual and phonetic similarity between the marks, so there was a likelihood of confusion. On final appeal to the EU General Court, it was ruled that the alleged co-existence of the brands in part of the EU did not have the effect of excluding the likelihood of confusion in the EU as a whole.

It was not until December 2011 that Assos began proceedings for trade mark infringement
and passing off and sought invalidation of the UK registration belonging to ASOS. The online retailer counterclaimed that the CTM was liable to be revoked as it had not been used in relation to any clothing goods other than specialist cyclists’ clothing. ASOS was entitled to rely upon the ‘own name’ defence as this name had been adopted honestly and without references to Assos and, despite millions of sales, there had been no evidence of confusion.

At first instance, Rose J decided partially to revoke the CTM to ‘specialist clothing for racing cyclists, jackets, t-shirts, polo shirts, tracksuit tops, tracksuit bottoms, casual shorts, caps’ and dismissed the invalidity attack against the mark based on earlier rights. She stated there was no likelihood of confusion between the two marks so there was no infringement, and hence declined to decide on whether the own name defence applied. The judgment referred to ‘notional fair use’, but then referred to the reputation of Assos as a prestige brand for cycling clothing but with no reputation for casual clothing. On this basis, the judge found it unlikely there would be any material confusion between the two marks.

Appeal and dissent

The matter then went to the Court of Appeal, with Lord Justices Kitchen, Underhill, and Sales presiding. The case was heard in November 2014, so it has taken some five months to reach a decision. This is quite possibly because there is a dissenting judgment.

The majority judgment overturned the High Court decision on likelihood of confusion and damage to distinctive character. All three judges were unanimous in finding the judge had erred by only considering the likelihood of confusion with respect to the actual use made of the trade mark by Assos rather than looking at notional and fair use across the whole specification, even with partial revocation of goods. The judges found that there was some damage to the distinctive character of the mark. The ability of Assos to identify some of the goods for which it was registered as being the goods of Assos had, in some circumstances, amounted to the normal and fair use of that mark being weakened.

The absence of actual confusion was not conclusive, particularly because Assos sold
through a specialised distribution channel in the cycling field, not on the internet, whereas ASOS sold goods exclusively over the web. As an infringement test is based on the mark as registered, there had to be a likelihood of confusion.

The court was split on the extent to which the trade mark specification should be revoked
and whether the own name defence applied. On revocation, the majority felt that goods could
be as decided by Rose J with a slight amendment from ‘specialist clothing for racing cyclists’ to ‘specialist clothing for cyclists’. ‘Casual clothing’ was deemed too broad a category and therefore a list of specific goods was more appropriate, to read ‘jackets, t-shirts, polo shirts, tracksuit tops, tracksuit bottoms, casual shorts, caps’.

Dissenting, Sales LJ held that the category ‘casual clothing’ was appropriate. He said at paragraph 237 that ’neither party could suggest any sensible, non-arbitrary dividing line between the sort of leisurewear which Assos has already been selling and casualwear generally’. He therefore thought the appropriate formulation could be ‘specialist clothing for racing cyclists and casualwear’.

As infringement on appeal had been found, the own name issue came back into focus. The name ASOS had been adopted innocently, but the only search carried out by the defendant was a Google search. No trade mark searches were carried out either upon the adoption of the acronym originally or when its use was extended to new countries.

Their Lordships decided on balance that the defendants had fulfilled their duty to act fairly
in relation to the Assos business but had not conducted their own business in a way that would unfairly compete with the claimants. As a result, the own name defence applied.

Sales LJ, in dissent, stated that the own name defence should not be available and focused particularly on the failure to conduct reasonable trade mark checks. ASOS should have appreciated it ought to use another sign which differentiated its goods from those of Assos and then invested in developing that brand using a different sign. Creation by ASOS of country-specific own-language websites directed at other EU member states was a further step that the company should not have taken, as it failed to be compliant with honest practices in relation to the legitimate interests of Assos. More weight should be placed on the rights of the trade mark proprietor and the interests of the public not to be confused. 

Carrollanne Lindley is an intellectual property partner at Kilburn & Strode @KilburnStrode

 

 

 

 

What can we learn from Assos v ASOS? Online businesses need to be aware at whom their website is aimed   Various factors will be taken into account, including the language of the website, the currency in which payment can be made, and where goods can be shipped. If a business uses a ‘.com’ or other URL that is accessible from a number of countries, it should consider undertaking a trade mark clearance search (not just a Google search) covering each country before adopting a new brand or expanding the use of a current brand into a new country. Otherwise, according to Sales LJ’s dissenting judgment, particularly if it is a big enterprise, failure to do so leading to ignorance of a third-party mark could mean the business is found to have not acted in accordance with ‘honest practices’. To register or not to register? Businesses should be aware that the filing of an application to register a mark, even for a brand they have been using for some time, could draw them to the attention of a third party with conflicting rights. This could lead to a dispute, and is another reason why conducting a clearance search to be forewarned of such risk is prudent. Internet infringement and forum shopping  If a business becomes aware of a third party using a confusingly similar brand, it should consider taking action without delay. This both avoids acquiescence and estoppel issues and prevents a court from being more sympathetic to the third party, which was allowed to continue accumulating goodwill in its brand for some time before action was taken.  Some of the most critical advice for brand owners is around litigation strategy. This is particularly pertinent for online trade mark infringement since such infringement often spans various countries and gives the brand owner the choice of bringing proceedings in different territories.  Each territory has pros and cons, such as whether they are known for being pro-brand owners, if they have specialist IP courts, if they can offer speedy preliminary injunctions or bifurcated validity and infringement proceedings; these are all factors to consider when deciding where to bring proceedings.  Forum shopping in internet infringement is well illustrated by cases like Euromarket Designs Inc v Crate & Barrel Ltd, where a US court found it had jurisdiction to hear the case because the Irish defendant used the ‘Crate & Barrel’ trade mark on its ‘.com’ website, which was accessible in the US, even though the defendant’s business was primarily in Ireland. A warning for internet retailers In the UK proceedings, in which ASOS counterclaimed for invalidity of the Assos CTM, the High Court held that at the priority date of Assos’s CTM application (June 2005), ASOS had only built up goodwill in relation to an online clothing store selling third party brands; it did not yet have sufficient goodwill as a supplier of goods bearing the ASOS brand to succeed in passing off. This draws an important distinction between the use of a brand in relation to (i) retail services, and (ii) the goods being sold. Internet retailers who do not sell own-brand goods could struggle to bring a claim for passing off against a third party using a confusingly similar brand on the goods themselves. Co-existence of brands As mentioned above, in the community proceedings, the General Court held that coexistence of the brands in part of the territory of the EU did not have the effect of excluding the likelihood of confusion in the EU as a whole. This highlights the difficulties involved in assessing CTMs as unitary rights across the 28 countries of the EU. It is particularly relevant to online traders, whose websites are often accessible in multiple countries across the EU, but where sales may be confined to only some of those countries.  Distribution channels Differing distribution channels will not prevent a finding of likelihood of confusion. In the Assos v ASOS case, the absence of actual confusion was not conclusive, particularly because Assos sold through a specialised distribution channel of predominantly cycling shops (and not on the internet) and ASOS sold only over the internet. Since the infringement test is based on the mark as registered, the court held that there was a likelihood of confusion. Internet retailers may, therefore, wish to consider confining their registered trade mark specifications to online sales only.  Company names Businesses should consider using their core brand in their company name in order to make the own name defence available to them. Alexandra Pygall is an intellectual property partner at Stephenson Harwood @SHLegal